By Tiernan Ray

Intel chairman Andy Bryant says it’s a sad day as the company accepts CEO Paul Otellini’s decision to step down in May.

Following Intel‘s (INTC) announcement this morning that CEO Paul Otellini will step down, Intel chairman and former chief financial officer Andy Bryant , himself a 31-year Intel veteran, was kind enough to spend a few minutes by phone talking with me a short while ago.

He said he was surprised when Otellini told him last week he would retire. Although Bryant had talked with Otellini in past, “We were targeting further out” for a transition, said Bryant. “I thought I would have more time.”

Bryant said he’s been talking with Intel executives and employees, and that “It’s a hard day here at Intel; Paul is extremely cherished and valued.”

Bryant said although he tried to get Otellini to stay, Otellini felt it was time to turn over the reins to a new generation as Intel admittedly faces challenges in the mobile computing arena — challenges, however, that Bryant feels Intel can meet through its superior chip-making technology.

Following are more extensive remarks by Bryant:

He and I talked a lot about this in past. After almost 40 years at Intel, and the Intel CEO job for 8 years, which is a really hard job, he felt it was time to move to the next generation of leadership. We do have big issues in front of us, moving to the tablet and phone markets, and he was ready to let the next generation lead those battles. I did everything I can think of to buy myself another year [of Otellini's leaderhip]. We were targeting further out for this. He surprised me last week when he said this. We do need to look both internally and externally, I think that’s good governance and appropriate. We’ve got five very senior executives, including the three promoted today [Renne James, the head of software; Brian Krzanich, the head of manufacturing; and Stacy Smith, Intel’s CFO] as well as Dadi Perlmutter [head of Intel's mobile efforts] and Arvind Sodhani [president of Intel Capital] who are important to run Intel into the future. We generally think we have a deep and strong bench. Paul made his decision last week and by SEC rules, we have four days to make a public announcement, and so we are just now at the beginning of a process we didn’t expect to have to conduct. Paul has a very strong record of achievement. On the manufacturing front, we’re ahead of Samsung [Electronics (005930KS)] and everyone else in the world. We’re shipping the most advanced [semiconductor] process, and providing chips in smartphones outside the U.S., and in tablets inside the US. The ultrabook is remaking the PC market. We’re pretty comfortable with where we are technically. This year, we have to continue to push the power/performance envelope. We’re the best in the world with the technology and as good as anyone with efficiency. Meaning, one is the best science, and the other is the best process technology. I would expect Samsung and others to continue to make progress, and you never assume people you are competing with will stop the technological advance. But we expect to take advantage of the increasing gap in technology we’ve established. My intention is to be around at Intel for a substantial amount of time. I’ve been talking with quite a few executives and employees at Intel. It’s been a hard day here. Paul is extremely cherished and valued, and above all, this was his decision.

Intel shares are up 3 cents at $20.22, having recovered from earlier losses.

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